As per data, there are nearly 3 million active sellers dealing through the Amazon platform. These sellers are mostly differentiated by their fulfillment method.
Do you know what are those methods? I'll explain to you the two types of fulfillment methods and, their advantages. By the end of this blog, you can jump to a conclusion on which type of selling is the best.
Before that, you should be aware of the product you sell. Knowing the level of competition your product has, is a key factor in framing your business strategy.
To know the number of competitors, i.e the FBA and FBM sellers of your products, just scan your products with Amazon Online Arbitrage Multi-Tool.
It will scan your products and gives you details such as ASIN, UPC, Sales Rank, FBA and FBM sellers, Net profit, and ROI. Make use of these details in a diplomatic way and improve your sales strategy.
Fulfillment by Amazon (FBA)
Fulfillment by Amazon is a simple type of selling, in which Amazon will take care of the logistic parts of selling like shipping, packing, and storing. All you need to do is just stock your inventory in Amazon fulfillment centers.
Fulfillment by Merchant (FBM)
Fulfillment by Merchant refers to the type of selling in which the seller has to handle everything on his own, like storing, packaging, shipping, and managing the orders. This is adopted by nearly 43% of Amazon sellers.
Advantages of FBA
When you take up Fulfillment by Amazon, you can enjoy free two-day shipping.
You need not worry about customer service, because Amazon will do it for you. Yes, Amazon will offer 24/7 customer service for products sold under FBA.
You can just stock your products in their fulfillment centers. They will deliver the products from the warehouses directly to the customer.
Products that are sold under FBA will have Amazon Prime Logo. So the probability of conversion for your products is comparatively high.
Amazon will take care of the returns and refunding process. So you are free from that hustle.
If you are an FBA seller, you have the highest chance of winning the BUY BOX from Amazon.
Advantages of FBM
In the case of FBM, the seller has full control over the inventory. So he could change his business strategy according to the market trends.
The fees paid by FBM sellers are very less when compared to the FBA sellers, as FBA sellers should pay separate fees for shipping and warehousing.
The FBM sellers have more opportunities to build a brand that is more feasible.
It is comparatively easier to handle the online and offline activity of a particular stock.
You can have a direct deal with the customers. You need not rely on Amazon for handling customer queries.
Both FBA and FBM are profitable methods. All you need to do is to analyze your business, know its pros and cons, and then select the type of fulfillment.
FBM is quite suitable for sellers who,
Sell exclusive products.
Sell products of small volume.
Want to use Seller Fulfilled Prime [SFP]
Has logistics in place.
Has warehouses or places to store their inventory.
Has a good customer support team.
FBA is quite suitable for sellers who,
Sells high-volume products.
Are ready to manage the cost that will incur from Amazon.
Do not have the capacity to store their stock.
Sells products that are small and light-weighted.
Wants to maintain high-performance metrics in relation to orders.
If FBA has free Two-day Prime shipping, then FBM has Seller Fulfilled Prime [ SPF].
By this, you can get a bird's eye view of the FBA and FBM methods. If you use it in a strategic way, surely you can turn your business into a profitable one.
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